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RIM shares close down 12 per cent as BlackBerry 10 finally unveiled

RIM CEO Thorsten Heins with the new Blackberry mobile device, BB10 in New York City, Tuesday, January 29, 2013

Michael Falco for the Globe and Mail

As he finally unveils BlackBerry 10, Research In Motion Ltd. CEO Thorsten Heins says the long-delayed launch of the company's make-or-break new smartphones will be worth the wait.

At an event in New York on Wednesday, Mr. Heins showed off two new smartphones running RIM's new operating system called BlackBerry 10, which forms the cornerstone of RIM's comeback effort against much bigger rivals.

In an interview with The Globe and Mail, Mr. Heins said feedback from wireless carriers and dedicated customers around the world leave him convinced that RIM now has the technology to succeed. RIM is deploying a product platform it has carefully worked to perfect even as it grappled with losses, layoffs, delays and devastating drops in market share to giant rivals such as Apple Inc. and Samsung Electronics Co.

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"I took on the job as CEO because I knew the company had something up its sleeves," Mr. Heins said.

Mr. Heins said RIM is now entirely focused on ensuring BlackBerry 10 catches on quickly with customers, dismissing the possibility that the new smartphones will prove to a failure.

"I don't think this is an option," he replied. "I'm not saying this just out of the blue. I'm saying this because I've met with 100 carriers. I've flown the world four times. I've seen their reaction. It's for us to deliver now… We really have to deliver the product we said we'd deliver. And then I think we'll have quite a good chance for success. And if not, the company has developed a whole new platform that is absolutely leading edge in the world of mobile computing. Wherever you go with this, life continues, and we will find another path to go," Mr. Heins said.

"But right now, I'm not spending too much time thinking about this. Right now, all the energy in the company is – get BB10 out of the door and sell it," he said.

Shares in RIM, which at the start of trading Wednesday were in positive territory, turned lower shortly after the BlackBerry 10 unveiling began in New York. The stock was hit with further selling in late afternoon trading and closed down nearly 12 per cent on the TSX. Profit-taking was largely blamed on the move, but some also linked it to disappointment that the new devices won't hit U.S. store shelves until March.

The first device to launch is the BlackBerry Z10, a full touchscreen device with a display slightly bigger than an iPhone. It will launch in the United Kingdom on Jan. 31, in Canada on Feb. 5 and in March for U.S. consumers. The BlackBerry Q10, which has both a touchscreen and a physical QWERTY-keyboard, will launch on global carriers starting in April. Both devices will cost about $600 without a subsidy from a wireless carrier, and roughly $199.99 on a three-year contract.

Mr. Heins elaborated on a vision for RIM that involves bringing out a variety of BlackBerry 10 models, at different price points and directed at particular markets around the world, over the course of the next year. He stressed that RIM would not "crowd" the market with too many BlackBerrys that were not properly distinct from each other.

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At the same time, Mr. Heins described a longer-term push with BlackBerry 10 into so-called machine-to-machine computing verticals in the automotive and health-care industries. QNX Software Systems, a company RIM acquired because of their operating system technology, already outfits cars such as Bentleys and other industries with software. But right now it's all about smartphones, Mr. Heins said, noting that RIM needs to use BlackBerry 10 as a way to show the world RIM can still compete in the sector.

"Short term, we need to regain our market share and position in the U.S. – we need to show that we're absolutely capable of building high-end devices," he said. "Second, one part of the team is working on getting BlackBerry 10 into other verticals. Think about automotive. QNX is very strong in automotive, and some other industries," he said. "We're working on signing partnerships, getting into this business is not a one year program. Mobile computing is going to be the next huge growth wave for wireless. This will be a three-to-five year approach. But what I'm really confident in is that we have a platform that gets us there. And (the older BlackBerry operating system) wouldn't have gotten us there. That's why we needed to build this new platform."

To help sales, RIM said there are now roughly 70,000 apps available in RIM's BlackBerry World, including BB10 apps from social media sites Twitter, Facebook, LinkedIn and Foursquare, as well as the music-streaming service Songza and the Star Wars version of Rovio's popular Angry Birds game. RIM has also upped the multimedia content available through BlackBerry World, making available everything from music and TV shows to newly released movies.

All of these moves – including the sleeker, more fluid user interface on the touchscreen device – are designed to reposition RIM in a market that has come to be almost thoroughly dominated by Apple's iPhone and phones running Google's Android software by Samsung – which together accounted for 92 per cent of all smartphone sales in the fourth quarter, according to research firm Strategy Analytics.

But Mr. Heins insinuated that the type of smartphones pioneered by Apple and Android devices have gotten stale, even as Nokia Corp. devices running Microsoft's Windows Phone software have failed to gain traction in the market. He contrasted the new BlackBerrys' ability to flow between running applications with Apple's iOS software and Google's Android operating system, which generally require users to close an app before they open another one.

"This whole in-and-out paradigm that was successfully introduced five years ago, it was a revolution at that time and I have respect for that, but it's never been evolved," Mr. Heins said. "We're taking this to a whole new level."

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Of course, this is Day One for RIM's new software platform: It is unclear whether the consumers who have largely abandoned BlackBerrys, or the businesses who have begun deploying iPhones, will buy RIM's new BlackBerry Z10 or Q10 devices. Mr. Heins says that as RIM mounts its comeback, it can count on the carriers – who he says are desperate to see more competition between device makers.

"[The carriers] live in a duopoly right now," Mr. Heins says. "I mean, make no mistake: it's Apple and Samsung ruling it. Nokia, based on Windows Phone 8, has tried to get in. We know what the results are – we've seen the numbers."

Mr. Heins says all this, including the data points and BlackBerry 10 pre-registration numbers he's seen already, "point toward a success" for the company's new smartphone platform.

"We have a pretty good shot at being a major player," Mr. Heins said. "But again, it's all about execution. We better get this right."

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